On May 29, Bitwise Industries furloughed its 900 employees nationwide “effective immediately.” Why? The company ran out of cash and couldn’t pay its employees. As news about the company’s financial problems unfolded, we learned that almost two years earlier Bitwise failed to pay its employees’ federal taxes and its City of Fresno business taxes.
In addition, the company got into trouble by asking for a loan using as collateral properties another company claimed to own. That company, NICbyte LLC, of Texas, sued Bitwise.
But what is (or was) Bitwise? Why did the demise of this company have such an impact on Fresno and the San Joaquin Valley?
According to its website, Bitwise’s mission is to be a transformative tech company offering technology-based solutions for underserved communities and clients. But the company is also involved in real estate, renting office space, and buying and selling properties.
Bitwise applied for and received loans and financial support in the last year or so but is incapable of paying those back.
Bitwise suspended its operations effective May 30, and its board terminated co-CEOs and co-founders Jake Soberal and Irma L. Olguin Jr. The Board of Directors appointed Ollen Douglass as the interim president, effective June 1. The board is conducting an investigation to determine what caused the financial “implosion” of the company.
Bitwise was the “poster child” of what a “young, innovative” company could do in an underserved area such as the San Joaquin Valley. The dream of our own “Silicon Valley” became a reality—Bitwise was it.
Watch “visionary” Olguin’s presentation on TED Talks from 2021—now with 2.5 million views—to understand how Bitwise sold us a dream. In a well-articulated presentation, Olguin “introduces the work she’s done to uplift and empower people in her community in Fresno and shows how it can be a model to elevate ‘underdog’ communities across the world.”
Not small potatoes.
However, the co-CEOs of Bitwise made decisions and secured loans without informing their own board. So what was cooked in the dark, behind the scenes, is now public domain.
The most surprising thing about this fiasco is that it could have been avoided by applying a simple rule: Regulate corporations. But corporations don’t like rules, and elected officials help them because, well, the money for their electoral campaigns comes from somewhere.
When regular citizens apply for welfare assistance, they have to navigate a heavy bureaucracy and controls—you know, people in power impose these controls because they are afraid John or Jane Doe might get an extra penny they “don’t deserve.” But they don’t mind letting corporations go unregulated.
Unless we change something in our political system, the Bitwise story will be repeated.